Will tight PP supply counterbalance lower propylene in Europe?

In Europe, an initial November propylene contract settled down €40/ton on Tuesday stirring up discussions among players about the upcoming PP trend for the new month. Players are now questioning whether tight supplies will counterbalance falling monomer costs or not. So far, sellers expect the ongoing supply constraints to offset any possible impact from the lower propylene settlement and say they intend to approach buyers with rollovers or even small price hikes in the case of low availability, according to ChemOrbis. During October, PP sellers had issued price cuts initially before applying some increases towards the end of the month and finishing their limited quotas. “We recently sold out our remaining quotas for homo PP and PPBC injection with €50/ton increases compared to early October to Germany due to good demand and our short supply. Although propylene contracts settled lower, we are planning to seek rollovers for November as our allocation is not ample,” a source at a West European producer declared. A distributor in Italy said, “We had very limited quantities of homo PP in October while we sold PP copolymer from South Korea with delivery in late December. We are planning to seek some increases for materials to be delivered in February.” “PP prices have risen compared to the beginning of October when we purchased some material. Suppliers claim that they do not have much allocation,” a compound maker confirmed. A household items converter in France received €30/ton hikes this week compared to two weeks ago. On the other hand, a source at a West European producer, who wrapped up October business with €110/ton reductions month over month in Germany, does not expect to witness any supply concerns in November. “We believe fresh deals will probably be concluded with rollovers for PP,” a producer source noted. An agent of another regional producer stated, “We were expecting rollovers for November PP cargos prior to the propylene contract news but now we are not sure about the direction of new offers.” “Producers have further increased their official list prices whereas we think we will be able to pay lower PP prices than the current ones as supply is not as short as claimed by sellers,” commented a converter in Italy. As reported on Chemorbis, spot propylene prices on FD NWE basis declined more than €100/ton throughout October to break below the €500/ton threshold. Spot naphtha costs moved down by around $20/ton on CIF NWE basis during the period.